C-122/96

I — Introduction O n 27 September 1994, Mr Saldanha, along with MTS, instituted proceedings against Hiross before the Handelsgericht (Commer- cial Court), Vienna, seeking to prevent inter- nal restructuring transactions within the group controlled by Hiross which would 1. In this case, the Court is called upon once have involved the transfer of shares from cer- again to rule on whether certain national tain companies to others within the same procedural provisions are compatible with group. At the request of the defendant, the the rules of Community law, in particular Handelsgericht ordered the plaintiffs to the principle of non-discrimination laid lodge the security for costs provided for down in Article 6 of the EC Treaty. The under Paragraph 57 of the Zivilprozeßord- national provisions in question are those of nung (Austrian Code of Civil Procedure, the Austrian legal system which, in this case, hereinafter 'the ZPO'), since none of the require foreign nationals bringing legal pro- grounds of exemption set out in Paragraph ceedings against nationals of the country in 57(2) was applicable in the case. The appel- which the action has been brought to lodge a late court before which Mr Saldanha con- sum of money as security for the costs of the tested the decision delivered at first instance legal proceedings (cautio iudicatum solvi). concerning provision of the security in ques- tion held that, under Article 6 of the E C Treaty, the Austrian procedural rule in ques- tion did constitute discrimination on grounds of nationality. For the purpose of applying that Treaty provision, the appellate II — The facts of the case court pointed out, it was immaterial that the plaintiff had dual British and American nationality. N o r was it relevant that the per- son concerned resided outside the Commu- nity: the complete equality which the Treaty established between Austrian nationals and 2. Mr Saldanha, who is resident in Florida Community nationals had, it ruled, the effect (USA) and holds both American and British of prohibiting in every case the security at nationality, and MTS Securities Corporation, issue, since national law exempted Austrian which has its registered office in the United nationals, even if residing outside Austria, States of America, are shareholders in Hiross from the obligation to provide it. Holding A G (hereinafter 'Hiross'), a com- pany which has its registered office in Aus- tria.

against the above appellate decision and 4. So far as concerns the application ratione before which the matter is now pending, temporis of Community-law rules, the Ober- states that, under Paragraph 57(1) of the ster Gerichtshof sets out a number of obser- Z P O , foreigners who bring proceedings vations arguing in favour of the application before an Austrian court are required to pro- of the Treaty rules to the present dispute, vide, for the benefit of defendants and at the notwithstanding the fact that the dispute latters' request, security for the legal costs, arose before Austria acceded to the Commu- except where otherwise provided by interna- nity. The Oberster Gerichtshof notes that tional treaty or convention. That rule, the appellate courts, among which, in this case, national court states, is designed to protect the Oberster Gerichtshof itself must be defendants in proceedings before national included, are obliged, in the absence of tran- courts against abusive or vexatious claims sitional provisions, to take account of bind- made by foreign plaintiffs. Under Paragraph ing ins superveniens even after the decision at 57(2) of the ZPO, however, there is no obli- first instance, even though the facts in issue gation to provide such security where the relate to a period prior to the entry into plaintiff is normally resident in Austria or a force of that new law. The Oberster Gerichts- judicial decision ordering the plaintiff to hof argues that the provisions of the Treaty, indemnify the defendant for his legal costs and in particular Article 6 thereof, are of would be enforceable in the State in which such a binding nature. The decision to refer the plaintiff is normally resident. in this case must therefore, it argues, be based on those provisions. Also for the rea- sons set out above, the Oberster Gerichtshof discounts the possibility that, for the pur- poses of the decision which it is required to reach, the similar prohibition of discrimi- nation on grounds of nationality laid down in Article 4 of the Agreement on the Euro- pean Economic Area, to which Austria has been a party since 1 January 1994, may be of relevance. The Oberster Gerichtshof also points out that Austrian nationals who are normally resident or have their domicile abroad are not required to provide the security within the meaning of Paragraph 57 of the Z P O . Consequently, according to that court, the 5. In view of the Community nature of the rule of procedural law in question does not legal problems arising in the present dispute, draw any distinction according to whether a the Oberster Gerichtshof in Vienna has con- plaintiff has or has not within the national sidered it necessary to refer the following territory assets capable of forming the sub- question to the Court for a preliminary rul- ject of enforcement proceedings. According ing: to the Oberster Gerichtshof, the disputed rule has its basis in the desire to safeguard Austrian nationals residing abroad as well as in the desire to take account, for reasons of reciprocity, of the similar rule provided for in this regard by the majority of European 'Where proceedings are brought before an legal systems. Austrian civil court by a British national

who is also a national of the United States of Community provisions are dealt with in the America, who resides in that country (in domestic legal system and, more generally, to Florida) and does not have any residence or examine the criterion governing the applica- assets in Austria, against a limited company tion ratione temporis of primary Community whose registered office is in Austria, seeking law. to have that company restrained from selling or otherwise transferring shares in specified subsidiary companies to its Italian subsidiary company, or to subsidiaries of that company with registered offices in Italy, without the approval of a qualified majority of three- quarters of the general meeting of sharehold- ers or, in the alternative, of a simple majority 7. A situation quite similar in several of the general meeting of shareholders, does respects to that here under examination was the fact that he has been ordered by the recently considered by the Court in the Data competent Austrian court (of first instance), Delecta case. > The facts giving rise to that on application by the defendant company dispute before the national court had pursuant to Paragraph 57(1) of the Austrian occurred before the Kingdom of Sweden Code of Civil Procedure, to provide security acceded to the European Communities. The for costs in a specified sum constitute dis- Court, however, addressed the merits of the crimination on grounds of nationality con- question submitted to it without having pre- trary to the first paragraph of Article 6 of the viously examined whether and how the facts EC Treaty?' in issue came within the scope ratione tem- poris of Community law; in that case, the Court did not provide the national court with any interpretative criteria regarding the exact definition of the temporal context in which Community law produces its effects and did not, therefore, make it clear whether Ill — Examination of the case the case in question fell to be resolved according to Community law or according to rules derived from some other legal sys- tem. What actually happened in the case was A. Admissibility that, in ruling on the merits, the Court of Justice set out the principles of law with which the national court, in casu the Swedish Supreme Court, had to comply. This latter 6. The question submitted to the Court in court, however, subsequently ruled that the this case raises a delicate preliminary prob- dispute did not come within the scope of the lem concerning the application ratione tem- EC Treaty. 2 The result was that the ruling of poris of the provisions of the EC Treaty. The the Court of Justice was set aside since it had Court is being asked to rule on the interpre- become irrelevant in regard to the dispute tation of a Treaty provision in relation to before the national court; it ought therefore facts which occurred at a time when the Republic of Austria, whose procedural pro- visions are in dispute in this case, did not yet belong to the Community. It is for that rea- 1 — Case C-43/95 Data Delecta and Forsberg v MSL Dynamics [1996] ECR 1-4661. son necessary to consider how the above 2 — Judgment of the Högsta Domstol of 13 November 1996.

to be said, if one reflects on the case, that arose. In the absence of express provisions to that question could not and ought not to the contrary, the principle tempus regit have been submitted for a preliminary ruling. actum governs the temporal effect of Com- munity law. Situations arising at a time when the rules in question were not yet law in relation to the facts underlying the dispute do not therefore come within the scope ratione temporis of the Treaty. It follows that the abovementioned principle tempus regit 8. The facts of the dispute at present before actum must be uniformly applied within the the Court also occurred prior to the entry Community. Otherwise, the regulation of into force in Austria of the EC Treaty. In the the temporal effects of the Treaty rules could Data Delecta case, the national court making vary, with obvious and unjustified different the reference had not specified the reasons in treatment of similar situations depending on law which could have justified retroactive the national legal system called on each par- application of the rules of Community law ticular time to guarantee the provisions of to the dispute. In the present case, however, the Community legal system. the national court making the reference has itself indicated, albeit with a certain amount of doubt, that Community law does apply to facts dating back to a period when Austria did not yet belong to the Community. The reason for this retroactive application of Community law, the national court states, lies in the mandatory nature of Community law, which, as ius superveniens, is directly applicable, under Austrian procedural law, to 10. Another consequence which should be all cases in which final decisions had not yet pointed out follows from the foregoing con- been delivered by the date on which the EC siderations. A Member State may, on the Treaty entered into force in Austria. basis of its own independent choice, decide that certain rules of Community law are to be retroactively applicable to situations aris- ing at a period prior to that State's accession to the Community, for the specific purpose of conferring on the persons concerned rights and privileges to which they would 9. This line of argument regarding the appli- not otherwise be entitled under the Treaty. cation ratione temporis of Community law, The Community legal system does not, in however, gives rise to perplexity on a num- my view, prohibit national legislatures from ber of counts. I, for my part, doubt whether adopting such legislation. The problem is Community law can in itself govern situa- that these would, in any event, be internal tions arising under different legislation which rules, which certainly do not change their does not, unless in special circumstances nature simply through the fact of being such as those allowing retroactive application adopted by reference to Community rules. It of more favourable penal provisions, show is not the Community legal system that sufficient connecting factors with the Com- imposes these latter rules within the domes- munity rules which could have been relied tic sphere of the State, but rather the national on at the period in which those situations system that has taken them over by confer-

ring on them a temporal effect which they Communities 'to decide on the interpreta- would be lacking in their original legal sys- tion of an EEA rule'. The exercise of that tem. In my view, the Court of Justice would option, however, is expressly made subject to therefore not be competent to rule, in pro- prior performance of the obligation, set out ceedings for a preliminary ruling, on the pro- in Article 2 of the above Protocol 34, to visions thus introduced into the domestic notify the Depositary and the Court of Jus- legal system, precisely because they are not tice of the European Communities to what rules which come within its jurisdiction extent and according to what modalities the under Article 177 of the Treaty. 3 protocol is to apply to the courts and tribu- nals of the State in question. Austria, how- ever, has not exercised that power or satisfied the obligation to which such exercise is sub-

Even if the Court wished to reformulate the question along these lines in order to bring it within the ambit of the cor- responding provision in the EEA Agreement (Article 4), the Court would in my view lack jurisdiction to rule on the question submit- ted to it for a preliminary ruling. The ques- tion in this case comes from a national court which, at the time when the facts in issue occurred or at the time subsequently when the main proceedings were instituted, was not competent to address a question to the Court of Justice pursuant to that Agreement. It is true that, under Article 107 of the EEA

I-5331

O P I N I O N O F MR LA P E R G O L A — CASE C-122/96

but are not Community Member States may B. Merits have recourse. 6 At the time when Austria, Finland and Sweden acceded to the Commu- nity, an ad hoc agreement 7 laid down rules allowing the courts and tribunals of those three Member States, albeit for a short period, to refer cases of the type mentioned 13. In the event that the Court should rule to the EFTA Court, even following accession that it does have jurisdiction, I shall set out to the Community. In those cases in which below some thoughts on the merits of the the jurisdiction of the EFTA Court is question submitted for a preliminary ruling. expressly provided for, the national court called on to apply the provisions of the EEA Agreement is certainly not empowered alter- natively to raise the question for a prelimi- nary ruling before the Court of Justice rather than before the EFTA Court. There is no such possibility of choice, nor could such a There is here, in my view, one single real choice have been provided for without run- problem, which arises on the basis of this ning counter to the principle of exclusive Court's case-law regarding the compatibility jurisdiction which the Court of Justice has, of the security for legal costs with the prin- moreover, confirmed even in specific relation ciple of non-discrimination. It is necessary to to the EEA Agreement. 8 determine whether the proceedings brought by the plaintiff involve a substantive right protected by the Community legal system or whether the Court is faced with proceedings brought exclusively by reference to the pro- visions of company law in force at the time within the Austrian legal system.

I - 5332

SALDANHA A N D MTS v HIROSS

by the plaintiff into relation with the provi- legal order and that established by the EEA sions of the EEA Agreement and specifically Agreement. with those set out in Articles 31 to 35 seek- ing to eliminate restrictions on freedom of establishment, which also relate to compa- nies, as well as Article 77, dealing with com- pany law, which refers to Annex XXII, which imposes an obligation on EFTA States party to the Agreement to give effect within 16. The other issue in dispute concerns the the EEA to a series of Community direc- nature and the effects of the rule of Austrian tives, with a view to rendering equivalent the procedural law underlying the dispute which guarantees designed to protect the interests has been referred to the Court. O n this of shareholders and others in the corporate point, for considerations of a general nature context and with a view to regulating specific regarding the legality under Community law matters relating to companies, such as seces- of the security for costs and the criteria per- sions, mergers and so forth. mitting application thereof, I refer to the judgments , 0 given most recently by the Court on this subject and the Opinions n which I delivered in those cases.

I - 5333

OPINION OF MR LA PERGOLA — CASE C-122/96

17. In contrast, consideration should be paid also be required not to apply that provision to the reasoning set out by the Austrian in order to ensure compliance with the rules Government, which argues that the disputed in which that principle is set out. What mat- provision of national law is compatible with ters, in any event, for the purpose of pro- Community law because it provides an ceedings which are the subject-matter of a exception for contrary provisions under reference to the Court, is that the rules with international treaties or conventions, with which it must ensure compliance should be the result that Community nationals are fully and directly applied within the national exempt from having to provide the security. legal order. The Member State, thus, remains The same, it need hardly be mentioned, competent in regard to solutions at the con- applies with regard to the EEA. This inter- stitutional level which it considers appropri- pretation, in conformity with Community ate or preferable for the purpose of achieving law, put forward by the Austrian Govern- such a result, on condition that individuals ment does not alter, but rather confirms, the can enjoy effectively and with certainty the conclusion which I have reached: the only rights conferred on them by the Community difference is that it shifts the obligation to legal order or that of the E E A . , 2 In any comply with the Community or EEA rule event, the national courts are required to from the legislature, which would be take the view that the contested security can- required to repeal or amend the provision not be applied to or held against a Commu- contrary to the principle of non- nity or EEA national. 13 discrimination, to the courts, which would

In the alternative, should the Court consider that it does have jurisdiction to rule on the question submitted, I propose that it reply along the following lines:

Article 4 of the Agreement on the European Economic Area precludes nationals of Community Member States or of States party to the EEA Agreement from being required to provide security for the costs of legal proceedings, as provided for under Paragraph 57 of the Austrian Code of Civil Procedure, where Austrian nationals, in similar circumstances, are not required to provide such security.

I - 5335